The Payment Mechanism will include provisions for reducing the Monthly Payment if the Contractor has not met the contractual performance standards under the performance framework. Research on operational projects by Partnerships UK38 found that where Authorities chose to waive their right to make deductions, there was no apparent correlation between waiving deductions and good performance. Therefore it is important that where the Payment Mechanism provides for a deduction from the Monthly Payment that the contractual position is enforced as this gives a clear message about how poor performance will be dealt with and avoids setting a precedent that may be difficult to break later. Contract management team members that work closely with the Contractor may be more sympathetic to arguments that the Contractor should be let off in deductions in the interests of maintaining a good working relationship. The Contract Manager should ensure that such staff are regularly reminded of the need to enforce deductions at all times and are not authorised to agree a waiver. These points should be highlighted in the Contract Management Manual.
In the WIDP Contract the provisions for Force Majeure (Clause 69.2) also make it clear that the deductions should still be made even if a Force Majeure Event is compromising the Contractor's ability to provide the Services.
Under the WIDP Contract the deductions that can be made are subject to the Excusing Cause regime (see Section 4.5.3) and any caps on deductions (see Section 4.5.4).
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38 This guidance is available online at http://www.defra.gov.uk/environment/waste/local-authorities/widp/widp-procurement-pack/